Headhunters' Secret

Allen Samuel is loved--and hated--for selling employee lists

Allen R. Samuel is an electronic-dope dealer of sorts. He discreetly peddles information. Crude stuff, really: long, lonely columns of names and telephone numbers--mostly of high-tech workers. Yet in the midst of the most competitive job market in 30 years, Samuel's lists are quietly frightening some of the world's best-known technology companies, from Adobe Systems Inc. to Yahoo! Inc. And they point to how tech recruiting has become one of the New Economy's most ignoble new arts.

Wedged between a real estate firm and a "Mom's Cooking Place" restaurant in a Hollywood (Fla.) strip mall, Samuel's company, Direct Search of the U.S. Inc., traffics in what businesses consider copyrighted, proprietary, or, in some cases, secret information--their internal corporate telephone directories. For headhunters and stockbrokers scrambling to fill high-tech positions or find new clients, these directories are studded with invaluable information: job titles, e-mail addresses, direct-dial phone numbers, and even spouses' and children's names. "I'm looking for a few top people in some of the best companies in the world," says Nicole Rich, a recruiter at WorldNet Cos., a Fort Lauderdale Net service provider that has used Samuel's data to identify and lure away 15 programmers over the past year. "Allen is my main source," says Rich.

Chatty, with a salesman's penchant for hyperbole, Samuel, 33, claims to have plenty of dish: 700 directories, in fact, most of them collected through swaps among a loose group of headhunters and cold-callers. He also relies on a cadre of computer consultants he befriended while studying computer-network engineering. They work at a client site for a few months and slide directories to Samuel, who sells them--for up to $185 apiece--to some 1,000 clients. Ironically, says Samuel, his customers include many of the companies whose own directories he sells, including Intel Corp. (Intel says it buys corporate directories but doesn't use Samuel's service.) "It's a no-brainer," says Samuel who professes to be "pretty much a boring guy" grossing from $100,000 to $300,000 each year. "I'm offering something people can't live without."

WELL HIDDEN. The pilfered companies certainly could. With unemployment dropping to a 30-year low and with high-tech employees more scarce than 'N Sync backstage passes, companies are increasingly fearful of poachers. Problem is, few even know that Direct Search exists, since it's hidden behind a password-protected Web site and the occasional oblique classified in stockbrokers' magazine Registered Representative. "Recruiting is the toughest job we have," says semiconductor maker C-Cube Microsystems Inc. spokesman Alan Markow, who was surprised when told his directory is listed as available. "The number of headhunting calls we get is tremendous. We're careful to protect our lists."

To others, what Samuel is doing borders on the illegal. Cadence Design System Inc.'s Andy Foster, upon being told that his company's directory is for sale, said: "It's wrong for someone to be peddling these lists. If someone obtained our directory illegally, our legal team would look into it and take action."

Just how much protection do companies have from Samuel's service? Although he admits he's in a "gray area" of the law, he claims to keep things "technically legal." Indeed, his lists fall under a confusing nest of copyright, trade-secret, and employment laws that may make it difficult to fully stop him, says Erika Koster, an attorney at Oppenheimer Wolff & Donnelly in Minneapolis who has sent cease-and-desist letters to Samuel on behalf of clients she declines to name. Koster says Samuel complied.

SLIPPERY LAW. Many companies stamp a copyright on their paper directories, but that generally covers only the directory's cover art and unique page design. Simple, individual facts are not copyrightable. To get around these claims, Samuel employs a data-entry clerk who helps copy the information into raw columns of names and numbers. There is still one other legal argument: that the directories are proprietary information, and anyone who misuses them is liable for damages. But that standard is generally enforceable against the employee who leaks the directory, not the person who receives it. It would be up to individual courts to determine whether Direct Search is within the law, says Oppenheimer attorney James E. Schatz. Even then, each directory would be decided on a case-by-case basis.

The hunt may already be on. Attorney Koster says she has been contacted by the FBI about Direct Search. Reached for comment, New York-based special agent Edward Saks would neither confirm nor deny an investigation.

Samuel, meanwhile, is treading lightly. "If I'm doing something illegal, please show me and I'll stop it," he says, adding that he has removed 15 or 20 directories from his Web site at the request of companies. He remains unruffled by criticism, saying that the lists are a karmic retribution against corporations who pester consumers with telemarketing calls. "I'm sitting down having a salad, and MCI calls me and asks me if I want to buy some long distance," he says. "Why can't Merrill Lynch's brokers call company employees and say: `Want to buy some stock?"'

It's a question that tech companies, ever protective of their employees, aren't likely to chuckle over.

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